) fourth quarter 2012 earnings (excluding special items) of 91
cents per share handsomely beat the Zacks Consensus Estimate of
73 cents. Lower selling, general & administrative costs
boosted earnings in the reported quarter. The company earned 96
cents per share in the final quarter of 2011. Including one-time
items, fourth-quarter 2012 earnings surged 36.1% to 49
cents per share.
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Revenues in the final quarter of 2012 declined 5% to $612
million. The decline was primarily attributable to lower sales of
its osteoporosis drug, Actonel due to generic competition.
Moreover, reduced sales of dermatological product Doryx hurt
revenues in the fourth quarter of 2012. Revenues, however, beat
the Zacks Consensus Estimate of $564 million.
Full year earnings came in at $4.09 per share, well above the
Zacks Consensus Estimate of $3.91 and 6. 8% above the year-ago
earnings. Full year earnings were above the guidance range of
$3.75-$3.85 per share. Revenues decreased 7.4% to $2.5 billion in
2012, in line with the Zacks Consensus Estimate.
Revenues from osteoporosis products declined 35.2% to $125
million. Actonel sales declined 42% to $104 million. The
loss of patent exclusivity of the drug in Western Europe in Dec
2010 hurt revenues in the quarter. We remind investors that
Actonel was acquired from
Procter & Gamble Company
) in 2009. Bulk of the revenues (62.5%) came from the US market.
US sales of the drug were down 40% in the fourth quarter of 2012
primarily due to a 40% decrease in filled prescriptions.
Warner Chilcott, which expects Actonel sales to continue
declining, believes that osteoporosis therapy Atelvia (launched
in Dec 2010) will help counter loss of revenues from Actonel in
the US. Atelvia contributed $21 million to total revenue in the
fourth quarter of 2012, up 10.5% sequentially.
Revenues from oral contraceptives climbed 40.2% to $136 million.
Sales of Lo Loestrin FE (launched in the US in 2011) doubled to
$42 million in the final quarter of 2012. Moreover, sales of
Loestrin 24 FE climbed 25.4% to $89 million. Sales of Loestrin 24
FE increased due to a decline in sales-related deductions and
higher average selling prices. An expansion in pipeline
inventories also contributed to the increase in sales of Loestrin
24 FE in the final quarter of 2012.
Sales of hormone therapy products climbed 15% to $61 million in
the fourth quarter of 2012, driven by increased sales of Estrace
cream (up 21.4% to $51 million). A 10% increase in filled
prescriptions, a decline in sales-related deductions and higher
average selling prices led to the rise in Estrace cream sales in
the reported quarter.
Sales of dermatological product Doryx plummeted 59% to $19
million owing to generic competition and an increase in
Sales of gastroenterology product Asacol climbed 15% to $204
million in the final quarter of 2012. Bulk of the sales (90.6%)
came from the US market. US sales of Asacol climbed 15.6%
facilitated by higher average selling prices, decline in
sales-related deductions and an expansion of pipeline
inventories. Sales of urology product Enablex declined 2% to $40
million in the final quarter of 2012.
Selling, general and administrative (SG&A) expenses were down
8% in the reported quarter to $191 million. The decline was
attributable to cost savings as a result of the move to the
distributor model in Western Europe, reduced co-promotion
expenses as a result of lower Actonel sales in ex-US markets and
a reduction in the US field sales forces. Research and
development (R&D) costs climbed 15% to $30 million in the
fourth quarter of 2012 due to an increase in project spending.
2013 View Backed
Warner Chilcott maintained the guidance for 2013, issued by it
earlier in the month. The company continues to expect to earn
$3.20-$3.30 per share on total revenues of $2.3-$2.4 billion in
2013. The Zacks Consensus Estimate for 2013 is currently pegged
at $3.28 per share, on revenues of $2.4 billion.
Warner Chilcott currently carries a Zacks Rank #3 (Hold).
) are well placed in the pharmaceutical space with a Zacks Rank
#1 (Strong Buy).